Dallas Fed president says Fed can't be safety net for fiscal cliff

Congress must act, Fisher says

Federal Reserve Bank of Dallas President Richard Fisher said the U.S. central bank can’t act as a backstop for the economy should lawmakers fail to prevent the country from going over the so-called fiscal cliff.

“I do not see us as that safety net” in the event that Congress fails to reach an agreement, Fisher said in an interview on CNBC today. “We just can’t continue down the road of an infinite expansion of monetary policy.”

The Congressional Budget Office has forecast that the $607 billion in automatic spending cuts and tax increases slated to take effect Jan. 1 would put the economy into a recession next year. Gross domestic product would shrink by 0.5 percent and joblessness climb to about 9 percent if it isn’t averted, according to the CBO.

Fisher, who doesn’t vote on the policy-setting Federal Open Market Committee this year, has been among the most vocal critics of further easing within the central bank. The FOMC last month voted to continue buying $40 billion in mortgage bonds per month until the employment outlook improves.

U.S. growth is currently “positive and anemic” and isn’t “fast enough,” he said in the interview today. Inflation and inflation expectations have remained “under control,” he added.